All posts tagged EMI

It’s been a month since EMI owner Citigroup asked for “final” offers for the music company, and it’s a testament to what a difficult environment it is that the bank has yet to strike a deal. When Citi kicked off the auction in June, EMI’s chief indicated a deal would be in place by now.

But Citigroup has struggled to lock down a buyer for its recorded-music division, which, though home to star musicians such as Coldplay, has been buffeted by ill-winds in the industry….

So perhaps it’s not surprising that Citi would work to restart its mating dance with Videndi’s Universal Music. And billionaire Len Blavatnik may not be out of the running, either.

Private-equity chieftain Alec Gores, who failed in efforts to buy movie house Miramax and is pursuing a purchase of bankrupt bookstore chain Borders, also may offer to buy record label EMI Group, Bloomberg News is reporting. Gores earlier took a run at a different record label, Warner Music, which a conglomerate controlled by investor Len Blavatnik recently agreed to buy. Busy guy, that Alec Gores. >> READ MORE

Financier Guy Hands had a rather embarrassing 2010, with a lawsuit that dinged his reputation and a soured deal for music company EMI. But apparently business picked up in spite of those setbacks.

According to the 2010 investor letter from Hands, the chairman of Terra Firma, the private equity firm’s funds all posted “solid recoveries” in 2010 compared to 2009. (Not surprising, perhaps, given the market recovery from the doldrums of 2009.) Hands, however, sent a warning about this year: “2011, which most investors expect to be equally benign, will probably disappoint,” Hands writes.

EMI, the Beatles record label, could use the kind of financial and reputational lift it would glean from a deal with iTunes.

U.K. private equity firm Terra Firma took over EMI in 2007 for £4 billion, an investment that has turned sour as EMI groans under the weight of its debt. Citigroup, which helped finance the deal, has looked like it may have to seize control of the company to recoup some of its original investment.

Terra Firma’s Guy Hands says a Citigroup banker duped him into overpaying for the EMI record label.

An answer will come from a nine-person jury hearing a lawsuit brought by private-equity executive Guy Hands over his purchase of the EMI record label. The founder of Terra Firma is suing Citigroup for more than £6 billion ($8.4 billion), and the case hinges on whether the jury believes Hands or the main man on the opposite side of the courtroom, Citi banker David Wormsley.

Hands said Wormsley duped him into overpaying for EMI by making it sound like the 2007 auction was competitive, when Terra Firma turned out to be the only serious bidder. Citigroup denies that Wormsley misled Hands. The bank says Hands had locked in its bid for EMI, and says Hands now is looking for a scapegoat to blame for his soured deal.

In this “he said-he said” courtroom saga, Deal Journal asked trial consultants not involved in the case how popular anger about the financial crisis will influence jurors weighing the credibility of two financial bigwigs, Wormsley and Hands. They said the jury is likely to walk in disliking each side, but Citigroup may get the slightly shorter end of the stick.

“They probably won’t trust either of them, but they’ll probably trust a non-banker rather than a banker,” said Richard Waites, a lawyer, psychologist and CEO of jury-consulting firm, The Advocates.

Paul Hodkinson, of Financial News, files this dispatch from the SuperReturn private-equity conference in Berlin. Financial News is a Dow Jones publication and a contributor to Deal Journal. Guy Hands, founder of U.K. buyout shop Terra Firma, provided a glimmer of optimism for the buyout industry, saying investment opportunities this year and next are likely [...]

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Dealpolitik is Ronald Barusch's strategic look at deals currently making the headlines as well as the major forces at work in the deal-making world. He was a M&A lawyer with Skadden, Arps, Slate, Meagher & Flom for over 30 years. He retired in 2010 after 25 years as a partner at the firm. Click here for his current and archived columns.